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Financial literacy month takes place in the month of November. Similar to National Spaghetti Day on January 4th, except it gets an entire month because, well, your finances are a bit more important than spaghetti! When it comes to finances, we sometimes choose to ignore or place the topic on the back burner. Financial literacy month aims to bring forward the topic of our finances and create conversation and education based around our financial situation.
Financial literacy month is not only an important topic of conversation but it gives an opportunity to place more emphasis on figuring out and being aware of your own financial position. It’s important because it gives us a nice little push forward into re-evaluating our daily, weekly, and monthly spending habits and find ways in which we could improve. Especially with the holidays right around the corner, we are able to make a proper budget and allow ourselves to go into 2022 feeling good about our financial position.
Although financial literacy month only occurs during the month of November, you should be thinking about your finances all year long. Here’s a few facts to back this up:
Financial Literacy Month has a variety of benefits for Canadians. Typically, each year will carry a theme specific or most relatable at the time. For example, Keeping track of your finances during difficult time was the theme for 2020 where COVID-19 created many personal financial difficulties for people.
It is now 2021, a year later, and Financial Literacy Month is has a wide range of focus for consumers to get educated about. A few of these focus areas include how you should be managing your current (and future) debt, creating savings, and information on various digital financial products to help you become more financially independent. it will also help you to find information easily and accessibly when you need or want it.
It’s also important to note that Financial Literacy Month is for everyone! Whether you’re a teenager that just got their first debit card, or you’re a middle-aged citizen looking to see what you should be doing to prepare for retirement in the next few years, Financial Literacy Month can benefit you in many ways and give you access to information that might be either difficult to find or not easy to digest.
This section will be all about budgeting. And an easy formula to figure out how much you should be spending and where is to use this fantastic rule. This rule states that half (or 50%) of your income should be allocated to needs. About a third (or 30%) can be spent on wants, and finally, you should be putting about a fifth (or 20%) into long term savings.
Here’s a basic breakdown of each category:
Savings: This could include a few different financial products, such as RRSP’s, a TFSA, and creating an emergency fund.
Wants: This is the fun category. This is essentially anything you like and makes you happy. Maybe a movie? Or eating out, or you could even go on a small trip. The goal here is to allow you to do things that you enjoy, because life is short!
Needs: This category includes rent (or mortgage), food, payments, gas costs, and anything else that is essential for you to live your life. And in case you were wondering, no, Netflix is not essential!
Everyone over 18 years old should ensure they have a TFSA set up. This allows you to save and earn interest on your own money, tax-free of course! Keep in mind, there is a contribution limit.
You can contribute to your RRSP from your income before it is taxed, up to a certain amount. Unlike a TFSA, you will have to pay tax on your money upon withdrawal.
Whether you’re struggling financially or not, Financial Literacy Month can benefit you greatly. It can either get you back on track to feeling financially stable or it can provide you with information on how to improve your current level of wealth by maximizing the financial products available in the marketplace today.